Part 2: Transaction Analysis and Financial Statement Impacts Unlimited Fun is a new business that hosts children's birthday parties. Analyze each of the following January transactions by identifying which accounts are impacted and how the financial statements are affected. Record each transaction in the horizontal financial statements model. The first transaction is completed for you as an example. 1. Unlimited Fun received $65,000 cash from Rachel, the owner, and issued common stock Stmt. of Cash Flows Income Statement Balance Sheet Assets IN Liabilities Acct. Acct. Salaries Receiv Supplies Equip Pay 1! Pav 1 Stockholders' Equity Common Retained Stock Earnins 65.000 Cash 65.000 Net Revenue Expenses Expenses income Cash Flow 65.000 FA 2. Unlimited Fun purchased a $1,900 computer. Unlimited Fun paid $900 in cash and received an invoice for the remaining balance. (Hint: This transaction impacts three accounts.) Stmt. of Cash Flows Income Statement Balance Sheet Assets TEN Liabilities Acct. Acct. Salaries Resell Supplies Eavin l Eauin. Pav. Pav. I 1900 1000 Stockholders' Equity Common Retained Stock Earnings Cash 1900) Net Revenue Expenses Expenses Income Cash Flow 3. Unlimited Fun purchased receipt paper and pens totaling $200 and charged the purchase on account from Office Oracle. Stmt. of Cash Flows Income Statement Balance Sheet Assets I Liabilities Acct. Acct. Salaries Receive Supplies - Equip Pay. 11 Pav Stockholders' Equity Common Retained Stock Earnings Cash Net - Expenses Income 4 Revenue Cash Flow 2 4. Unlimited Fun paid Office Oracle for the purchase in transaction #3. Stmt. of Cash Flows Income Statement Balance Sheet Assets I Liabilities Acct. Acct. Salaries Resell Supplies - Equin . Equip Pav. Pav Stockholders' Equity Common Retained Stock Earnings Cash Net Revenue Expenses Expenses Income Cash Flow 5. Unlimited Fun hired Lindsey as a store manager. She will earn $20 per hour and starts work next week. a . Income Statement Stmt. of Cash Flows Balance Sheet Assets TEL Liabilities Acct. Acct. Salaries Resell Supplies Eavin Pav. Pav. Stockholders' Equity Common Retained Stock + Earnings! Cash Net Revenue Expenses Expenses Income Cash Flow 6. Lindsey worked 40 hours and will be paid at the end of the month. (Ignore payroll taxes) Stmt. of Cash Flows Balance Sheet Assets I Liabilities Acct. Acct. Salaries Resell Supplies Eavin Pav. Pav. Income Statement Stockholders' Equity Common Retained Net Stock Earnings Earnings Revenue Expenses Income Cash Cash Flow 7. Unlimited Fun paid Lindsey for the hours she worked in transaction #6. Stmt. of Cash Flows Income Statement Balance Sheet Assets Liabilities Acct. Acct. Salaries Resel Supplies - Equip Pay. 14 Pav. Stockholders' Equity Common Retained Stock + Earnings Net Expenses o income Cash Revenue Cash Flow 8. Unlimited Fun agrees to host a birthday party for Sally Smith next week. Income Statement Stmt. of Cash Flows Balance Sheet Assets Liabilities Acct. Acct. Salaries Receiv Supplies Equip Pav. Pav. Stockholders' Equity Common Retained Stock + Earnings Cash Revenue Expenses Net Income Cash Flow 9. Unlimited Fun hosted Sally's birthday party described in transaction #8 and received $400 cash. 8 $ Income Statement Stmt. of Cash Flows Balance Sheet Assets I Liabilities Acct. Acct. Salaries Rece Supplies Equip 14. Pav. 1 Pav. Stockholders' Equity Common Retained Stock + Earnings Net Revenue Expenses Income Cash Cash Flow 10. Unlimited Fun received and paid the $290 electric bill. Stmt. of Cash Flows Income Statement Balance Sheet Assets Liabilities Acct. Acct. Salaries Reset Supplies Equip Pav1 Pav. Stockholders' Equity Common Retained Stock Earnines Net Expenses income Cash Revenue Cash Flow 11. Unlimited Fun hosted a family day for a local company and billed the customer $2,500. Stmt. of . Cash Flows Income Statement Balance Sheet Assets Liabilities Acct. Acct. Salaries Receiv Supplies Equip Pav. Stockholders' Equity Common Retained Stock + Earnings Cash Pav. + Net Revenue Expenses Income Cash Flow 12. Unlimited Fun collected $2,000 from the customer in transaction #11. Stmt. of Cash Flows Income Statement Balance Sheet Assets Liabilities Acct. Acct. Salaries Resel Supplies - Equip Pav. 1 Pav !!! Stockholders' Equity Common Retained Stock + Earnings Cash Net Revenue Expenses Income Cash Flow 5 13. Unlimited Fun paid a $1,000 dividend to Rachel, the owner. Stmt. of Cash Flows Balance Sheet Income Statement Assets Acct. Receive + Supplies - Equip. Liabilities Acct. Salaries + Pay. Stockholders' Equity Common Retained Stock Earnings Net Income Cash Pay. + Revenue Expenses Cash Flow Use the following table to summarize the transactions recorded above. The totals will be used to create financial statements in Part 3. Stmt. of Cash Flows Income Statement Balance Sheet Assets Liabilities Salaries Acct. + Supplies - Equip. Acct. + Pay. + Receiv. Pay. Stockholders' Equity Retaine Commo d n Stock + Earnings 65,000 Net Incom Expense + Revenue S e Cash 165,000 2 Cash Flow 65,000 FA 3 4 5 6 7 8 9 10 11 12 13 Tot als OA= IA= FA= 6
